The Revenge of the Nerds II: Nerds in the C.E.O.’s Office

When Facebook’s C.E.O., Mark Zuckerberg, got married last year, Billie Joe Armstrong, of Green Day, performed at his wedding. By early this year, nerdiness had become so deeply ingrained in pop culture that “Portlandia” ran a sketch in which a “legitimate” nerd bemoaned the appropriation of the label by the cool kids.

Now there’s a new milestone in the rise of the nerds: the news, reported Tuesday in the Wall Street Journal, that enterprise consulting giant Accenture PLC is in talks to acquire the management consultancy Booz & Co. The nerds, in other words, are coming to your C.E.O.’s office.

For the better part of two decades, the most sought-after jobs in the country (and the rest of the world) have been at technology companies. And yes, the head I.T. guy now has a C-level title—chief information officer. And yes, nerds have been making fortunes and running their own companies since Bill Gates started Microsoft as a Harvard dropout.

But the influence of nerds in the business world has remained pretty geographically concentrated: Silicon Valley is nerd central, but the executive offices of most other industries are still inhabited by the Harvard M.B.A. crowd, the ones with connections and better suits. (New York has Silicon Alley, but investment bankers and hedge-fund managers still rule this town.) Which brings us back to Accenture and Booz, and why the potential deal is much more significant than it might seem. (When contacted, Accenture had no comment. Booz didn’t immediately respond to a request for comment.)

Founded in 1914, New York–based Booz has never been the most prominent consulting company; that designation has belonged to McKinsey & Co. since the nineteen-twenties. With just over three thousand employees, its growth has stalled at less than $1.5 billion in annual revenue, at least in part due a softening in over-all demand, in the wake of the credit crisis, for strategic consulting—more general advice that focusses on answering why companies do something as opposed to how they do it. (Dreaming big is for the good times.) Meanwhile, Accenture, which specializes in the nerdy field of enterprise consulting—a term that encompasses all things information technology, from setting up a payroll system to running an e-commerce site—has seen its revenue jump thirty per cent in the past three years, to $27.9 billion in the 2012 fiscal year. With two hundred and sixty-six thousand employees, it dwarfs Booz, and if the deal goes through, it will do very little for Accenture’s financial prospects. But for the company, it’s all about respect.

For the past thirty years or so, a handful of generalist firms have stubbornly dominated management consulting. Those firms include McKinsey and Booz, as well as Bain & Company, the Boston Consulting Group, and a rotating roster of also-rans. The arrangement has persisted despite the fact that the information-technology decision—what to buy and how best to use it—has moved from a practical non-issue, in the pre-desktop-computer era, to the single most important topic a C.E.O. must consider. What used to be a Mac-or-PC decision now permeates everything about how businesses are run, from choosing a supplier to staying close to customers.

Accenture—along with its rival, the consulting arm of I.B.M.—do get called when companies are making expensive technical decisions. But Booz and the others are called when it’s time to brainstorm about the truly unknown future. What’s more, the people who hire C.E.O.s—boards of directors—agree. A 2008 study by USA Today calculated that the odds of a McKinsey employee becoming a C.E.O. at a public company were the best in the world, at 1 in 690. The closest rival was Deloitte & Touche, at 1 in 2,150. (Working at McKinsey was the plum post-college job of the nineties, Nicholas Lemann wrote in 1999.)

Remarkably, the generalists have clung to their élite position despite being completely outmanned. As far back as the nineteen-eighties, the Big Five accounting firms—Arthur Andersen, Deloitte & Touche, Ernst & Young, K.P.M.G., and Price Waterhouse—sensed the coming changes in information technology and began fielding legions of lower-priced consultants to help companies deal with ever-growing technology challenges. Arthur Andersen launched Andersen Consulting (which later changed its name to Accenture), Deloitte & Touche launched Deloitte Consulting, and Ernst & Young and K.P.M.G. also had their own efforts.

In an effort to downplay the threat, the generalists argued that if the enterprise crowd was the equivalent of a large army, they were still the élite Marines. In a 1991 internal worldwide-competitors review of technology and systems consulting, McKinsey consultants showed a lingering denial. “Frankly, [technology is] not that important an issue for the senior executives I serve,” said an unnamed McKinsey consultant.

In 1998, however, Andersen Consulting reported $8.3 billion in revenue. McKinsey? Two and a half billion. McKinsey suddenly started taking the “army” very seriously: in the late nineteen-nineties, McKinsey launched its Business Technology Office. The goal wasn’t to compete head-on with the systems-integration firms but to advise chief information officers on information-technology strategy, providing answers to questions like: How do you run your I.T. department? How do you prioritize projects? How do you keep I.T. costs down?

“Because we’re not actual venders of technology like most I.T. consultants, we’re sitting on the same side of the table as the C.I.O., not the opposite side,” said Frank Mattern, the head of McKinsey’s German office, in a July, 2011, interview. “That’s an enormously powerful and valuable position to be in.”

The maneuver worked, and the generalists retained the upper hand. A generalist didn’t do mere systems integration. He told you why you wanted one technology system or another. The generalists were going back to a familiar put-down of their nerdier competition: narrow expertise was for chumps; the generalists were about vision.

Consulting—especially strategic consulting—is a relationship business. And so now, with the potential acquisition, and the addition of Booz’s three thousand consultants, Accenture is surely going to get access to more strategic-consulting pitches than it otherwise would have been able to do. And despite the difference in size, there is nevertheless some high-margin money in it: the generalist firms’ revenue per professional is anywhere from two to three times that of the I.T. consultants.

Why now?

First of all, the global credit crisis limited demand for the kind of big-picture thinking that strategic consultants offer. Booz has been frantically seeking to scale up as a result, but a 2009 combination with Katzenbach Partners (which was founded by a McKinsey lifer who’d reached the firm’s retirement age) didn’t do much to accomplish that, and discussions in 2010 to combine with A. T. Kearney (a long-ago McKinsey spin-off) came to naught. Apparently out of options, Booz is considering selling out to its lesser relations.

But there’s also the revenge-of-the-nerds explanation.

Way back in the nineteen-twenties, the generalists called themselves “management engineers,” a reflection of the prevailing ethos, at the turn of the previous century, that science held the answers to most serious questions. But then came the era of the jock and the drive-in, the M.B.A. and the country club. For decades, that was the place to be, while the I.T. guys toiled away in the basement, hooking up coaxial cables, installing software on disk drives, and wearing pocket protectors. But those days are long gone. Science—specifically, computer science—is cool again. It’s Mark Zuckerberg’s world now.

In a 1983 internal report, McKinsey consultants reaffirmed their own greatness, telling themselves that Booz “[does] not pose a great threat to McKinsey’s overall preeminence in management consulting.” They were right. Booz plus Accenture in 2013? That’s a different story.